Ryanair 2010 Annual Report Download - page 111

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Ryanair is facing similar legal challenges with respect to agreements with certain other airports. In
2007 and 2008, the European Commission announced that it had begun investigations of airport agreements at
the Hamburg (Lubeck), Tampere, Berlin (Schonefeld), Alghero, Pau, Aarhus, Bratislava and Dortmund airports;
however, Ryanair has only limited flights to and from the first seven of such airports and does not operate
flights to or from Dortmund. On June 17, 2008, the European Commission launched a further investigation into
Ryanair’s agreements at Frankfurt (Hahn) airport, which is a significant base for Ryanair. The European
Commission announced in a public statement that its initial investigation had found that the airport might have
acted like a private market investor but that it had insufficient evidence to reach a conclusion and therefore had
elected to open a formal investigation. This investigation is ongoing. Previous complaints by Lufthansa about
Ryanair’s cost base at Frankfurt (Hahn) have been rejected by German courts. In addition, Ryanair is involved
in legal challenges including allegations of state aid at Alghero and Marseille airports. In January 2010, the
European Commission concluded the Bratislava state-aid investigation with a finding that Ryanair’s agreement
with Bratislava airport involved no aid.
In September 2005, the European Commission announced new guidelines on the financing of airports
and the provision of start-up aid to airlines departing from regional airports, based on the Commission’s finding
in the Brussels (Charleroi) case, which Ryanair successfully appealed. The guidelines apply only to publicly
owned regional airports, and place restrictions on the incentives these airports can offer airlines to deliver
traffic. The guidelines apply only in cases in which the terms offered by a public airport are in excess of what a
similar private airport would have offered. Ryanair deals with airports, both public and private, on an equal
basis and receives the same cost agreements from both. The guidelines have therefore had no impact on
Ryanair’s business, although they have caused significant uncertainty in the industry in relation to what public
airports may or may not do in order to attract traffic.
Ryanair believes that the positive decision by the CFI in the Charleroi case has caused the European
Commission to rethink its policy in this area. Ryanair believes that the Court’s findings should be addressed in
the upcoming revision of the guidelines. However, adverse rulings in the above or similar cases could be used as
precedents by other competitors to challenge Ryanair’s agreements with other publicly owned airports and could
cause Ryanair to strongly reconsider its growth strategy in relation to public or state-owned airports across
Europe. This could in turn lead to a scaling back of Ryanair’s growth strategy due to the smaller number of
privately owned airports available for development. No assurance can be given as to the outcome of these
proceedings, nor as to whether any unfavorable outcomes may, individually or in the aggregate, have a material
adverse effect on the results of operations or financial condition of the Company.
In November 2007, Ryanair initiated proceedings in the CFI against the European Commission for its
failure to take action on a number of state aid complaints Ryanair had submitted against Air France, Lufthansa,
Alitalia, Volare and Olympic Airways. Following the Commission’s subsequent findings that illegal state aid
had been provided to Air France and Olympic Airways, Ryanair withdrew the two relevant proceedings.
Ryanair is currently awaiting hearings in the remaining three cases.
In November 2008, Ryanair initiated proceedings in the CFI contesting the European Commission’s
refusal to grant Ryanair access to documents relating to the Commission’s state aid investigations at Hamburg
(Lubeck), Tampere, Berlin (Schonefeld), Alghero, Pau, Aarhus, Bratislava and Frankfurt (Hahn) airports. These
cases were heard on July 7, 2010 and a judgment can be expected in six to twelve months.
In March 2009, Ryanair also appealed (to the CFI) two decisions issued by the European Commission
in November 2008 relating to the sale of Alitalia’s assets to Compagnia Aerea Italiana (CAI) and to a 1300
million rescue loan granted to Alitalia by the Italian government and subsequently converted into Alitalia’s
capital. A date for hearing has not yet been set, but Ryanair expects these proceedings to last between two and
four years, in line with the average duration of CFI proceedings.
Aer Lingus Merger Decision. During the 2007 fiscal year, the Company acquired 25.2% of Aer Lingus.
The Company increased its interest to 29.3% during the 2008 fiscal year, and to 29.8% during the 2009 fiscal
year at a total aggregate cost of 1407.2 million. Following the acquisition of its initial stake and upon the
approval of the Company’s shareholders, management proposed to effect a tender offer to acquire the entire
share capital of Aer Lingus. This acquisition proposal was, however, blocked by the European Commission on
competition grounds. Ryanair filed an appeal with the CFI, which was heard in July 2009. On July 6, 2010 the
Court upheld the Commission’s decision. Ryanair has two months and 10 days from such date to appeal this
judgment. (see also: “Item 5. Operating and Financial Review and Prospects—Business Overview”).